1 00:00:00,880 --> 00:00:06,080 In this episode of American Greed, a near -perfect insider trading scheme. 2 00:00:06,660 --> 00:00:12,340 As long as Mr. G keeps his mouth shut and I keep mine and you keep yours. 3 00:00:13,080 --> 00:00:15,460 I don't think they're going to find enough of anything. 4 00:00:15,880 --> 00:00:21,460 Stealing merger secrets and turning them into millions. If you play it right and 5 00:00:21,460 --> 00:00:25,740 you're careful about covering your tracks, you have access to some of the 6 00:00:25,740 --> 00:00:30,300 important deals on Wall Street, and that's a goldmine. Until it was all 7 00:00:30,300 --> 00:00:31,159 on tape. 8 00:00:31,160 --> 00:00:33,580 You have to get all the things that cost that money. 9 00:00:33,920 --> 00:00:35,260 In stunning detail. 10 00:00:35,640 --> 00:00:37,820 Why don't you just run it through a washing machine? 11 00:00:38,120 --> 00:00:41,820 Shocking revelations of greed that stun even Wall Street. 12 00:00:42,440 --> 00:00:45,920 They allegedly stole some $32 million worth of inside information. 13 00:00:46,340 --> 00:00:50,860 The rise and fall of the longest known insider trading case in American 14 00:00:52,000 --> 00:00:57,000 And later, Gary Saffron appears to be an immigrant family's success story. 15 00:00:57,700 --> 00:01:03,300 He's a Boca Raton, Florida firefighter, a minister, and real estate broker. 16 00:01:03,760 --> 00:01:06,960 As a neighbor, you would think this gentleman was living the all -American 17 00:01:06,960 --> 00:01:12,110 dream. So why do police see connections between this suburban dad, and some of 18 00:01:12,110 --> 00:01:14,030 Miami's most vicious drug dealers. 19 00:01:14,430 --> 00:01:19,610 There were definitely two Garys. The chief of Boca Raton Fire Department knew 20 00:01:19,610 --> 00:01:22,270 the good Gary. There was, however, a bad Gary. 21 00:01:36,270 --> 00:01:38,710 Early 90s, New York City. 22 00:01:39,290 --> 00:01:42,510 This is where ambitious young men come to launch their careers. 23 00:01:42,730 --> 00:01:46,390 Men like Kenneth T. Robinson from Long Island. 24 00:01:46,630 --> 00:01:50,590 Ken Robinson kind of floated around a lot of different jobs. 25 00:01:50,810 --> 00:01:54,510 Ultimately, he kind of settled in the mortgage brokerage business. 26 00:01:54,910 --> 00:01:59,110 And his friend, car salesman turned law student, Matthew Kluger. 27 00:02:00,070 --> 00:02:04,630 After graduating from New York University Law School, Kluger lands at 28 00:02:04,630 --> 00:02:07,870 prestigious law firm Cravat, Swain and Moore. 29 00:02:08,520 --> 00:02:13,940 and starts to work on Wall Street and realizes what there is there, 30 00:02:13,940 --> 00:02:19,880 what information he has access to. The firm specializes in mergers and 31 00:02:19,880 --> 00:02:24,980 acquisitions of publicly traded companies, and Matthew Kluger has access 32 00:02:24,980 --> 00:02:27,180 crucial details about upcoming deals. 33 00:02:27,860 --> 00:02:31,920 Almost from the very beginning, you know, he discovered that he had this 34 00:02:31,920 --> 00:02:33,480 information that was valuable. 35 00:02:33,720 --> 00:02:37,640 So that's how he called Ken Robinson and said, I've got something. 36 00:02:38,120 --> 00:02:42,860 That something is an edge they could use to make money on the stock market ahead 37 00:02:42,860 --> 00:02:46,480 of a deal. It's illegal, but the men don't care. 38 00:02:46,840 --> 00:02:52,800 These guys clearly knew from the get -go what they had in terms of information 39 00:02:52,800 --> 00:02:56,540 and what they had to do to go around the system. 40 00:02:56,760 --> 00:03:00,520 To launch their plan, the two men will need a stock trader. 41 00:03:00,880 --> 00:03:05,460 Ken Robinson knows just the right person, his friend Garrett Bauer. 42 00:03:06,010 --> 00:03:10,250 They talked all the time on the phone. They spent New Year's together. They 43 00:03:10,250 --> 00:03:12,390 watched the Super Bowl together. 44 00:03:12,770 --> 00:03:14,330 They were just really good friends. 45 00:03:14,550 --> 00:03:19,210 Ken Robinson brings attorney Matt Kluger and trader Garrett Bauer together. 46 00:03:19,470 --> 00:03:25,610 This is a guy who sees a couple of friends that he can bring together and 47 00:03:25,610 --> 00:03:26,610 into gold. 48 00:03:27,400 --> 00:03:31,700 The three reportedly meet on a Manhattan street corner close to where both 49 00:03:31,700 --> 00:03:33,480 Kluger and Bauer are living. 50 00:03:33,740 --> 00:03:37,900 I think it was a meeting really to size each other up. I think Kluger wanted to 51 00:03:37,900 --> 00:03:42,240 size up Bauer to make sure that the way they were going to set up this scheme 52 00:03:42,240 --> 00:03:47,200 was one that they could rely on to remain secret. They all need each other. 53 00:03:47,200 --> 00:03:52,200 can't really do this without one another. And so it is, in a way, the 54 00:03:52,200 --> 00:03:53,200 setup. 55 00:03:53,780 --> 00:03:55,560 They sign off on a plan. 56 00:03:56,400 --> 00:04:01,360 Ken Robinson will pass Kluger's secrets to Garrett Bauer in advance of a major 57 00:04:01,360 --> 00:04:06,120 merger. Bauer will trade with that information before the deal goes public. 58 00:04:06,400 --> 00:04:11,780 When the company's stock rises, Bauer will cash out the profit, and the trio 59 00:04:11,780 --> 00:04:12,900 will split the money. 60 00:04:13,240 --> 00:04:18,720 It was shocking how brazen and how deliberate the scheme was. This was an 61 00:04:18,720 --> 00:04:23,160 that they had hatched deliberately to take advantage of Mr. Kluger's access to 62 00:04:23,160 --> 00:04:28,100 information. From here on out, Matthew Kluger and Garrett Bauer will have 63 00:04:28,100 --> 00:04:29,100 minimal contact. 64 00:04:30,440 --> 00:04:34,140 Separation between the man who steals the secrets and the man who trades with 65 00:04:34,140 --> 00:04:35,160 them is crucial. 66 00:04:37,160 --> 00:04:40,440 In 1994, the scheme gets underway. 67 00:04:40,740 --> 00:04:42,740 Murder deals are popping up left and right. 68 00:04:42,960 --> 00:04:47,180 Johnson and Johnson is poised to acquire skin care company Neutrogena. 69 00:04:47,440 --> 00:04:49,680 Matthew Kluger is working on the deal. 70 00:04:50,250 --> 00:04:54,990 Johnson and Johnson offered $35 .25 for Neutrogena. That's 70 % higher than that 71 00:04:54,990 --> 00:04:58,310 stock was trading at just two weeks ago. The company that's being acquired, all 72 00:04:58,310 --> 00:04:59,590 of a sudden, they're in play. 73 00:05:00,450 --> 00:05:01,670 They're of value. 74 00:05:01,910 --> 00:05:05,910 If you can buy stock in the company that's being acquired before the stock 75 00:05:05,910 --> 00:05:07,230 up, you're going to make a fortune. 76 00:05:07,790 --> 00:05:12,830 Using Kluger's inside knowledge, Bauer buys Neutrogena stock before the deal 77 00:05:12,830 --> 00:05:13,809 goes public. 78 00:05:13,810 --> 00:05:16,310 It's like playing the horses, knowing who's going to win. 79 00:05:16,850 --> 00:05:20,630 Kluger claims the men each make $8 ,000 on the tip. 80 00:05:21,130 --> 00:05:25,450 In 1995, the trio scores with a major technology deal. 81 00:05:25,930 --> 00:05:28,290 Lotus has agreed to a buyout by IBM. 82 00:05:28,670 --> 00:05:33,490 Final price is about $220 million more than IBM offered last week. It 83 00:05:33,490 --> 00:05:36,910 Once you do it once, it's kind of like, you know, it just gets bigger and bigger 84 00:05:36,910 --> 00:05:37,489 and bigger. 85 00:05:37,490 --> 00:05:41,050 They realize they can do it. They try for the next bigger hit. 86 00:05:41,370 --> 00:05:42,730 And it keeps on going. 87 00:05:43,550 --> 00:05:48,850 In 1997, two of America's most significant banks merge into one. 88 00:05:49,130 --> 00:05:51,810 These were the kinds of deals that were making front -page news. 89 00:05:52,370 --> 00:05:57,830 Kluger claims that he and his accomplices make their biggest payday 90 00:05:57,830 --> 00:06:00,790 ,000. The trio is on a roll. 91 00:06:01,370 --> 00:06:05,470 As time goes by, they become experts at avoiding attention. 92 00:06:06,050 --> 00:06:10,190 They structured their relationships and communications in order to avoid 93 00:06:10,190 --> 00:06:12,910 detection by criminal law enforcement authorities. 94 00:06:13,450 --> 00:06:17,710 The men make it a rule to stop using home telephones to trade secrets. 95 00:06:18,130 --> 00:06:21,890 Ken Robinson would call Matthew Kluger, the source of the information, on 96 00:06:21,890 --> 00:06:23,050 payphones using quarters. 97 00:06:23,350 --> 00:06:27,370 They used payphones so that there wouldn't be a way to connect them to 98 00:06:27,370 --> 00:06:28,370 other. 99 00:06:28,850 --> 00:06:33,090 When it comes to distributing the profits, they take every precaution. 100 00:06:33,550 --> 00:06:37,750 Bauer withdraws the money from neighborhood ATMs in amounts that won't 101 00:06:37,750 --> 00:06:38,750 detected. 102 00:06:39,020 --> 00:06:43,680 For minutes, 10 minutes, 15 minutes, 20 minutes, he would stand at ATMs taking 103 00:06:43,680 --> 00:06:48,140 out thousands of dollars, but because the ATMs had limits on the amount of 104 00:06:48,140 --> 00:06:51,760 he could take out per transaction, he would sit there and do withdrawal, 105 00:06:51,980 --> 00:06:55,740 withdrawal, withdrawal for one account and move on to the next account. 106 00:06:56,040 --> 00:07:00,480 Bauer passes the cash off to Robinson, who shares it with Kluger. 107 00:07:03,570 --> 00:07:08,610 Robinson and Bauer even have a ready -made alibi in case the feds come 108 00:07:09,010 --> 00:07:12,790 They make sure to spend time gambling in Atlantic City. 109 00:07:13,090 --> 00:07:17,990 They went there to use it as cover to wash the illicit cash that they had come 110 00:07:17,990 --> 00:07:20,930 in possession with so that they could justify it. 111 00:07:21,150 --> 00:07:24,790 That, no, no, no, that wasn't cash from insider trading. That was cash that we 112 00:07:24,790 --> 00:07:26,030 got from gambling in Atlantic City. 113 00:07:27,820 --> 00:07:32,860 By the late 90s, the scheme is working smoothly and the men are stashing their 114 00:07:32,860 --> 00:07:33,860 illicit cash. 115 00:07:34,360 --> 00:07:39,260 But despite the trio's attempts to hide their activity, federal authorities at 116 00:07:39,260 --> 00:07:43,440 the Securities and Exchange Commission are beginning to notice that something 117 00:07:43,440 --> 00:07:47,420 wrong. Big profits are being made ahead of certain mergers. 118 00:07:47,780 --> 00:07:52,040 If there's unusual trading, unusual activity in a stock ahead of a merger, 119 00:07:52,300 --> 00:07:55,540 they're going to look into that, they're going to drill down, they're going to 120 00:07:55,540 --> 00:07:57,420 try and figure out who knew. 121 00:07:57,760 --> 00:08:01,920 The reason for that is so that we can try to connect the dots between the 122 00:08:01,920 --> 00:08:04,220 who worked on the deal and the people who traded. 123 00:08:04,960 --> 00:08:09,980 SEC officials set their sights on Garrett Bauer for the profits he is 124 00:08:10,480 --> 00:08:14,960 So they start investigating, trying to track down an inside source. 125 00:08:15,660 --> 00:08:19,740 Is it someone from the company? Is it someone from the company that's being 126 00:08:19,740 --> 00:08:23,880 acquired? Or is it someone from the law firms that are working on putting this 127 00:08:23,880 --> 00:08:24,880 deal together? 128 00:08:25,100 --> 00:08:27,220 And that's what would lead them to Matt Kluger. 129 00:08:27,900 --> 00:08:33,299 Next on American Greed, the insider traders work to stay ahead of federal 130 00:08:33,299 --> 00:08:37,880 agents. These were sophisticated guys that knew what they were doing. And keep 131 00:08:37,880 --> 00:08:39,059 the money flowing. 132 00:08:51,050 --> 00:08:56,470 In the mid -90s, Ken Robinson, Matthew Kluger, and Garrett Bauer are using 133 00:08:56,470 --> 00:08:58,730 stolen secrets to make a fortune. 134 00:08:59,010 --> 00:09:02,630 The deals get bigger, the stakes get bigger, the potential profits get 135 00:09:03,070 --> 00:09:06,910 Officials at the Securities and Exchange Commission have their suspicions about 136 00:09:06,910 --> 00:09:08,690 Garrett Bauer's huge profits. 137 00:09:09,050 --> 00:09:12,990 But the federal agent can't make the connection to his source of information, 138 00:09:13,490 --> 00:09:14,870 Matthew Kluger. 139 00:09:15,520 --> 00:09:20,360 If Kluger is not contacting the trader directly and they're using all these 140 00:09:20,360 --> 00:09:24,200 cloak -and -dagger ways of communicating with one another, it's very difficult 141 00:09:24,200 --> 00:09:26,980 for them to follow that trail, and the trail runs cold. 142 00:09:27,220 --> 00:09:32,100 The group's triangular configuration, with Ken Robinson as the middleman 143 00:09:32,100 --> 00:09:35,400 the secrets from Kluger to Bauer, is watertight. 144 00:09:36,020 --> 00:09:40,460 Ultimately, the connection was not put together such that the investigations 145 00:09:40,460 --> 00:09:41,540 were able to move forward. 146 00:09:42,120 --> 00:09:48,140 By 2002, Matthew Kluger has stolen inside information from jobs at three 147 00:09:48,140 --> 00:09:49,140 different law firms. 148 00:09:49,760 --> 00:09:54,740 After eight years as partners in crime, he and his accomplices need a break. 149 00:09:55,720 --> 00:10:00,120 For a period of three years, the men stopped cheating. 150 00:10:00,440 --> 00:10:04,500 They were just living their lives. Kluger met his partner and was in a 151 00:10:04,500 --> 00:10:08,180 relationship, and Robinson got married and had kids. They just were three 152 00:10:08,180 --> 00:10:10,220 regular guys, really, with us. 153 00:10:10,490 --> 00:10:12,550 just this kind of secret connection together. 154 00:10:12,910 --> 00:10:17,730 They continue to work at their normal jobs. Here are guys who are making a 155 00:10:17,810 --> 00:10:23,470 at that point in time, apparently honest living. They are making the kind of 156 00:10:23,470 --> 00:10:28,050 money that allows them to have a typical American dream life, house, family, 157 00:10:28,230 --> 00:10:29,230 kids. 158 00:10:29,410 --> 00:10:35,050 That might well have been the end of the story, but ultimately it won't turn out 159 00:10:35,050 --> 00:10:36,050 that way. 160 00:10:36,550 --> 00:10:42,870 In 2005, Kluger gets a new job at Wilson Sonsini, a firm that specializes in 161 00:10:42,870 --> 00:10:43,870 high -tech deals. 162 00:10:44,130 --> 00:10:47,550 Wilson Sonsini is one of the preeminent firms in the mergers and acquisitions 163 00:10:47,550 --> 00:10:51,950 world. He was one of the law firms that is dialed into the most interesting 164 00:10:51,950 --> 00:10:55,750 technology deals. And what a time it is for technology companies. 165 00:10:56,310 --> 00:11:00,770 The era of automated trading, Google and Facebook is at hand. 166 00:11:01,390 --> 00:11:05,590 There's almost no better place to be around this time than a firm like Wilson 167 00:11:05,590 --> 00:11:10,450 Suncini. And if you know when the deal's going to hit, you know when to strike 168 00:11:10,450 --> 00:11:11,450 gold in the market. 169 00:11:11,610 --> 00:11:14,990 It's crucial information that Matthew Kluger can't resist. 170 00:11:15,410 --> 00:11:19,710 It's like a short thing. When you have information, it can just be too tempting 171 00:11:19,710 --> 00:11:21,710 to pass up for some people. It's grief. 172 00:11:22,160 --> 00:11:25,520 Here is access to money that we can get for doing nothing. 173 00:11:25,760 --> 00:11:30,400 Illegal money, but easy money. And so they jump in with both feet, and they 174 00:11:30,400 --> 00:11:32,160 start stealing secrets and trading on it again. 175 00:11:32,400 --> 00:11:35,460 Only this time, the three men raise the stakes. 176 00:11:35,900 --> 00:11:40,660 Not only did they return to their previous ways, they went in bigger, and 177 00:11:40,660 --> 00:11:44,400 got more sophisticated in their efforts to hide it. 178 00:11:44,680 --> 00:11:48,640 Kluger becomes so adept at searching through computer files that Wilson's 179 00:11:48,640 --> 00:11:51,340 unseemly, he doesn't even need to open them. 180 00:11:51,720 --> 00:11:54,780 He would just look at the titles of the documents so that there wouldn't be a 181 00:11:54,780 --> 00:11:55,800 trace of him. 182 00:11:56,300 --> 00:11:59,380 actually viewing them if law enforcement were ever to come. 183 00:11:59,600 --> 00:12:04,360 And with phone technology advancing, the men changed the way they communicate. 184 00:12:04,800 --> 00:12:10,200 Cell phones that didn't exist in 1994 now became so cheap that people can buy 185 00:12:10,200 --> 00:12:14,980 new cell phone prepaid and use it for however long they want and get rid of 186 00:12:15,100 --> 00:12:19,860 And so they would buy these throwaway cell phones, consciously making that 187 00:12:19,860 --> 00:12:21,540 decision to get more sophisticated. 188 00:12:22,140 --> 00:12:26,020 Now, the men pursue some of the era's biggest tech mergers. 189 00:12:26,300 --> 00:12:30,600 But the deal over here at the NASDAQ today up 17%. In April 2006, 190 00:12:31,340 --> 00:12:37,220 Quantum buys Advanced Digital Information, and the profit for the trio 191 00:12:37,220 --> 00:12:42,480 million. From then on, the team rakes in cash on deal after deal. 192 00:12:43,260 --> 00:12:47,880 Bain Capital Partners is acquiring 3Com for $2 .2 billion in cash. 193 00:12:48,100 --> 00:12:53,520 Hewlett Packard, Sun Microsystems, 3Com, Intel, all these big name companies. 194 00:12:53,600 --> 00:12:57,620 Some of these stocks shot up 30%. Huge amount of money. Oracle out with a 195 00:12:57,620 --> 00:13:00,880 surprise deal to buy Sun for $9 .50 a share. 196 00:13:01,400 --> 00:13:07,040 When Oracle purchased its Sun Microsystems in 2009, the payoff is the 197 00:13:07,040 --> 00:13:10,160 yet, a staggering $11 .4 million. 198 00:13:10,700 --> 00:13:15,520 That was a scale unlike they were doing in Act I of the scheme. 199 00:13:15,860 --> 00:13:20,500 What Robinson and Kluger don't know is that Garrett Bauer is playing them. 200 00:13:21,040 --> 00:13:25,200 Instead of trading the number of shares requested by his partners, he trades 201 00:13:25,200 --> 00:13:26,200 many more. 202 00:13:26,540 --> 00:13:31,680 And pockets the enormous profits. On a deal where Kluger and Robinson would 203 00:13:31,680 --> 00:13:36,540 $50 ,000 or $80 ,000, Bauer would make many multiples of that. 204 00:13:36,740 --> 00:13:39,800 They have no idea how much money Bauer is making. 205 00:13:40,200 --> 00:13:43,340 Bauer is making trades that they never dreamed of. 206 00:13:43,640 --> 00:13:50,520 In August 2009, Bauer buys a $6 .7 million condominium on Manhattan's Upper 207 00:13:50,520 --> 00:13:51,520 Side. 208 00:13:51,790 --> 00:13:56,090 One of these apartments that the elevator goes up, opens, and it opens 209 00:13:56,090 --> 00:14:00,550 into his apartment, a beautiful place that most people would dream to live in. 210 00:14:00,710 --> 00:14:05,150 And now that he's made many millions by executing trades without his friend's 211 00:14:05,150 --> 00:14:08,930 consent, Garrett Bauer says he's ready to retire. 212 00:14:09,170 --> 00:14:14,550 Garrett advises Robinson that he no longer wants to participate in the 213 00:14:14,550 --> 00:14:16,850 activity and bows out. 214 00:14:17,230 --> 00:14:22,490 As he exits the scheme, Bauer reminds Robinson not to trade on Kluger's tips 215 00:14:22,490 --> 00:14:23,490 without him. 216 00:14:23,510 --> 00:14:28,810 If he trades for himself in these same stocks, now there's a trail. Now you can 217 00:14:28,810 --> 00:14:30,310 start to link the three of them together. 218 00:14:31,530 --> 00:14:36,890 Next on American Greed, Ken Robinson can't resist the lure of easy money. 219 00:14:37,630 --> 00:14:41,790 He's seen this go on for such a long time. Maybe I'll see if I can do a 220 00:14:41,790 --> 00:14:43,650 bit on the side. It's a fatal mistake. 221 00:14:56,010 --> 00:15:02,010 It's 2009, and the insider trading scheme of Ken Robinson, Matthew Kluger, 222 00:15:02,010 --> 00:15:05,430 Garrett Bauer has racked up almost $30 million. 223 00:15:06,150 --> 00:15:12,150 It is mind -boggling. It certainly shows the confidence in these individuals 224 00:15:12,150 --> 00:15:13,530 that they wouldn't be caught. 225 00:15:13,750 --> 00:15:19,050 What Kluger and Robinson don't know is how much more Bauer has pocketed than 226 00:15:19,050 --> 00:15:24,460 them. While the two men have made less than $1 million each, Bauer has bought 227 00:15:24,460 --> 00:15:28,640 expensive condo and now has several million dollars in the bank. 228 00:15:29,120 --> 00:15:34,180 Later that year, Bauer stops trading on Kluger's inside information. 229 00:15:34,680 --> 00:15:37,680 But Kluger and Robinson are not ready to give up the scheme. 230 00:15:38,280 --> 00:15:41,380 They haven't made anywhere near as much money as Bauer. 231 00:15:41,700 --> 00:15:44,080 Kluger kept calling him and saying, we have to trade. 232 00:15:44,340 --> 00:15:49,560 So after Bauer agreed, we're not going to do this anymore, Kluger then calls 233 00:15:49,560 --> 00:15:52,760 Robinson again and says, hey, I've got a new tip. 234 00:15:54,920 --> 00:16:01,840 In October 2009, Ken Robinson trades on Kruger's information using his own name. 235 00:16:02,120 --> 00:16:06,080 He was the middleman. He was the linchpin. He doesn't realize how big of 236 00:16:06,080 --> 00:16:09,760 mistake he's making. It was human weakness. He didn't think anyone would 237 00:16:09,900 --> 00:16:13,080 So he figured, oh, let me just make this little trade. He couldn't help himself. 238 00:16:14,380 --> 00:16:16,480 But somebody does notice. 239 00:16:16,780 --> 00:16:22,780 In 2009, the SEC has new weapons aimed at detecting insider trading. 240 00:16:23,260 --> 00:16:27,080 As the technology has grown on Wall Street, so has the technology with the 241 00:16:27,080 --> 00:16:28,140 enforcement, the SEC. 242 00:16:28,440 --> 00:16:30,300 They have tools that they didn't have. 243 00:16:30,700 --> 00:16:37,360 The server capacity, the framework in which the data was stored, enabled us to 244 00:16:37,360 --> 00:16:40,960 search across large volumes of data very quickly. 245 00:16:41,260 --> 00:16:46,640 In fact, SEC investigators already have traitor Garrett Bauer in their sights. 246 00:16:47,390 --> 00:16:51,330 With their new technology, they have mapped a connection between Bauer and 247 00:16:51,330 --> 00:16:55,630 tech deals at Wilson Sonsini, the firm where Matthew Kruger works. 248 00:16:55,890 --> 00:16:57,110 The timing of Mr. 249 00:16:57,690 --> 00:17:03,800 Bauer's trades were immediately in front of... Mergers and acquisitions in which 250 00:17:03,800 --> 00:17:06,240 the law firm was involved. 251 00:17:06,540 --> 00:17:13,359 That caused great concern that we identify where he was getting his inside 252 00:17:13,359 --> 00:17:14,440 information from. 253 00:17:14,660 --> 00:17:20,440 Using a high -tech method called pattern analysis, the SEC also has tracked a 254 00:17:20,440 --> 00:17:23,339 trading relationship between Bauer and Ken Robinson. 255 00:17:23,780 --> 00:17:27,540 They frequently trade the same stocks at the same time. 256 00:17:27,800 --> 00:17:30,880 What that trading analysis did was it told us that... 257 00:17:31,240 --> 00:17:37,000 At a minimum, they likely knew each other. Once we knew that Mr. Robinson 258 00:17:37,000 --> 00:17:42,060 Mr. Bauer knew each other, then we surveilled very closely the securities 259 00:17:42,060 --> 00:17:46,640 they were both trading in. But Robinson isn't trading on the Wilson -Sonsini 260 00:17:46,640 --> 00:17:51,560 deals. For months, the SEC is unable to pin illicit trading on the two men. 261 00:17:52,400 --> 00:17:57,840 All that changes in 2009 when Robinson finally breaks the rules of the scheme. 262 00:17:58,670 --> 00:18:02,990 He trades without Bauer on a Wilson -Sonsini tip from Kluger. 263 00:18:03,450 --> 00:18:09,090 Once he trades on the deal, that indicates that Robinson likely has 264 00:18:09,090 --> 00:18:14,110 from the same source as Bauer. Now the line is complete. The line is solid. 265 00:18:14,630 --> 00:18:19,330 They have a link. This was a huge event in the course of our investigation. 266 00:18:19,870 --> 00:18:25,450 But authorities don't yet know the source inside the law firm is Matthew 267 00:18:27,310 --> 00:18:30,790 In the summer of 2010, the SEC alerts the FBI. 268 00:18:31,690 --> 00:18:34,510 Special Agent Michael Doyle takes the case. 269 00:18:34,910 --> 00:18:39,350 We really didn't know if Robinson was a source, if he had access to the source, 270 00:18:39,450 --> 00:18:41,790 or if Bauer was a source or had access to the source. 271 00:18:41,990 --> 00:18:45,910 They need to find the weak link. They have an idea of what the conspiracy is. 272 00:18:46,030 --> 00:18:47,330 They need somebody to flip. 273 00:18:47,710 --> 00:18:50,910 And the obvious person to go to first is Robinson. 274 00:18:51,320 --> 00:18:55,400 If you're objectively looking at who potentially would cooperate, is it the 275 00:18:55,400 --> 00:18:59,240 person who benefited the lion's share or is it the other person who didn't 276 00:18:59,240 --> 00:19:02,420 benefit as much but really had the access to the source? 277 00:19:03,800 --> 00:19:10,780 On March 8, 2011, FBI agents surprised Ken Robinson at his home on Long Island. 278 00:19:11,260 --> 00:19:15,300 They're searching his house. They're saying, you know, we've got you for 279 00:19:15,300 --> 00:19:17,000 trading. We know about your bank accounts. 280 00:19:17,320 --> 00:19:20,480 Robinson quickly understands what he is up against. 281 00:19:21,160 --> 00:19:22,560 The middleman has a choice. 282 00:19:23,160 --> 00:19:28,440 Cooperate with the FBI and betray his friends or face going to prison for 283 00:19:28,980 --> 00:19:33,740 That is a moment of truth for any human being when they've engaged in criminal 284 00:19:33,740 --> 00:19:35,960 wrongdoing. In that moment, you have to make a decision. 285 00:19:36,600 --> 00:19:42,320 Robinson soon tells the FBI everything about the scheme, about Garrett Bauer, 286 00:19:42,420 --> 00:19:45,820 and about their source, lawyer Matthew Klug. 287 00:19:46,700 --> 00:19:50,820 He agrees to help the FBI secretly record his friends. 288 00:19:51,300 --> 00:19:56,980 We knew what we wanted from him. We wanted him to see if he could gain 289 00:19:56,980 --> 00:20:01,900 the individuals, Bauer and Kluger, and if he could kind of recreate their 290 00:20:01,900 --> 00:20:02,960 on tape. 291 00:20:03,180 --> 00:20:07,980 When Robinson calls Kluger and Bauer, the FBI is listening. 292 00:20:08,380 --> 00:20:13,940 As long as Mr. G keeps his mouth shut and I keep mine and you keep yours. 293 00:20:14,510 --> 00:20:16,690 I don't think they're going to find enough of anything. 294 00:20:17,070 --> 00:20:22,810 They've coached Ken Robinson on what to say to get his friends to admit what 295 00:20:22,810 --> 00:20:23,810 they did on tape. 296 00:20:24,090 --> 00:20:28,390 This is where it comes out that Kluger never opened documents on his computer. 297 00:20:28,610 --> 00:20:31,210 They really get the nuts and bolts of how this scheme worked. 298 00:20:31,430 --> 00:20:35,250 Like how the trio plotted to destroy evidence from a recent trade. 299 00:20:44,870 --> 00:20:49,230 There was really no level of activity that they weren't willing to do to cover 300 00:20:49,230 --> 00:20:50,830 up their crime and make sure they weren't exposed. 301 00:20:55,130 --> 00:21:02,130 From a prosecutor's perspective, this evidence was as good as 302 00:21:02,130 --> 00:21:06,530 it gets, and we knew at that moment that we had a... 303 00:21:07,340 --> 00:21:11,480 a prosecutable and a very strong case. Two men were charged with making more 304 00:21:11,480 --> 00:21:16,580 than $32 million in illegal profits from trades based on information stolen from 305 00:21:16,580 --> 00:21:18,180 a prominent Silicon Valley law firm. 306 00:21:19,940 --> 00:21:25,580 Within days of the secretly recorded phone calls, FBI agents arrest Kluger 307 00:21:25,580 --> 00:21:28,100 Bauer at their homes and place them in custody. 308 00:21:29,720 --> 00:21:32,680 After 17 years, the scheme is over. 309 00:21:34,800 --> 00:21:38,360 Over the next few months, all three men plead guilty. 310 00:21:38,980 --> 00:21:43,760 Garrett Bauer forfeits his Manhattan home and $25 million in profits. 311 00:21:45,440 --> 00:21:49,880 In the months before his sentencing, the beleaguered trader attempts to make 312 00:21:49,880 --> 00:21:54,980 amends by giving talks at colleges about the ethics of insider trading. 313 00:21:55,320 --> 00:21:59,220 But truthfully, even if I did need the money, it's just not even close to being 314 00:21:59,220 --> 00:22:01,260 worth facing 10 years in prison. 315 00:22:01,900 --> 00:22:05,040 Putting my family what I put them through and putting my friends what I 316 00:22:05,040 --> 00:22:09,300 through. Garrett went out and on his own spoke at every major university, 317 00:22:09,300 --> 00:22:11,420 including Harvard and MIT and Columbia. 318 00:22:11,900 --> 00:22:16,780 And New York University to Professor Mark Brennan's business and ethics 319 00:22:17,160 --> 00:22:21,040 He said, well, I came here to make sure that none of you do the same thing that 320 00:22:21,040 --> 00:22:22,200 I did and screw up your life. 321 00:22:23,020 --> 00:22:26,740 Half the class was crying, saying, how did this happen to this guy? And the 322 00:22:26,740 --> 00:22:29,800 other half of the class wanted to choke him because they were so upset that he'd 323 00:22:29,800 --> 00:22:31,520 done this so brazenly for 17 years. 324 00:22:32,560 --> 00:22:39,480 On June 4, 2012, a judge sentences Garrett Bauer to nine years in federal 325 00:22:39,480 --> 00:22:44,500 for his role in the trading scheme, which he reserves the harshest 326 00:22:44,500 --> 00:22:48,020 for Matthew Kluger, 12 years behind bars. 327 00:22:48,720 --> 00:22:52,060 It's the longest jail sentence in insider trading history. 328 00:22:52,460 --> 00:22:57,120 Because he did have a choice. He could have done his job, been a lawyer, 329 00:22:57,320 --> 00:23:02,260 represented his clients, been loyal to his firm and his firm's clients. 330 00:23:02,560 --> 00:23:06,740 But instead, he took that information and he sold it, essentially. 331 00:23:07,060 --> 00:23:08,520 He profited off of it. 332 00:23:09,700 --> 00:23:14,680 For his role in helping authorities bring down the scheme, Ken Robinson gets 333 00:23:14,680 --> 00:23:15,680 just two years. 334 00:23:16,460 --> 00:23:19,860 But he has to live with the knowledge that his own greed helped bring down the 335 00:23:19,860 --> 00:23:23,900 scheme and with his betrayal of two close friends. 336 00:23:24,320 --> 00:23:29,740 He was extremely conflicted about what he had done. He felt extremely guilty. 337 00:23:29,740 --> 00:23:33,360 said, I wished that this all would have ended and we could have remained 338 00:23:33,360 --> 00:23:34,360 friends. 339 00:23:35,220 --> 00:23:36,880 Next on American Greed. 340 00:23:37,260 --> 00:23:42,700 How could a family man, minister, and Boca Raton firefighter scam millions? 341 00:23:43,320 --> 00:23:46,140 from some of Miami's most notorious drug dealers. 342 00:23:57,840 --> 00:23:59,240 Miami, 2005. 343 00:23:59,920 --> 00:24:04,380 Inside a downtown office building, a task force of local and federal law 344 00:24:04,380 --> 00:24:07,820 enforcement is taking on some of Miami's vices. 345 00:24:09,530 --> 00:24:12,730 They killed those guys. They killed the one officer. Real estate fraud. 346 00:24:13,350 --> 00:24:14,430 Cocaine trafficking. 347 00:24:14,930 --> 00:24:18,590 Murder. And every time we looked under a rock, we had more leads. 348 00:24:19,010 --> 00:24:24,350 The task force is investigating 20 unsolved murders in Miami -Dade County. 349 00:24:24,710 --> 00:24:29,490 Special Agent Hector Ortiz of the FBI says they fit a pattern. 350 00:24:29,790 --> 00:24:32,730 Basically, all these homicides were what we'd call whodunits. 351 00:24:33,630 --> 00:24:35,470 There was a shooting. 352 00:24:36,030 --> 00:24:39,890 There was a body. There was no eyewitnesses. There's one more common 353 00:24:39,890 --> 00:24:44,750 denominator. They're all casualties stemming from Miami's multibillion 354 00:24:44,750 --> 00:24:45,750 drug trade. 355 00:24:46,210 --> 00:24:49,430 Terry Goldston is a detective with the Miami -Dade Police. 356 00:24:49,990 --> 00:24:54,830 We established that, number one, that the victims are male, that, number two, 357 00:24:54,850 --> 00:25:00,090 that they're of Haitian nationals or either Haitian -Americans, and that they 358 00:25:00,090 --> 00:25:04,850 have some ties to either the drug industry or the music industry. 359 00:25:05,290 --> 00:25:10,670 They named the task force Operation Compa, a nod to the victim's connection 360 00:25:10,670 --> 00:25:12,370 popular Haitian dance music. 361 00:25:12,650 --> 00:25:16,470 They began to launder their narcotics proceeds through the Compa bands, and 362 00:25:16,470 --> 00:25:18,210 had record labels in South Florida. 363 00:25:18,450 --> 00:25:24,210 Operation Compa is an unusual task force. It combines street -savvy cops 364 00:25:24,210 --> 00:25:29,170 white -collar crime investigators, like IRS Special Agent David Keyes. 365 00:25:29,450 --> 00:25:33,690 It was kind of the merging of these different viewpoints, all focused with 366 00:25:33,690 --> 00:25:34,690 same goal. 367 00:25:35,050 --> 00:25:41,050 of taking down these drug traffickers, the guys like Ali Adam, and then taking 368 00:25:41,050 --> 00:25:42,310 down their support structure. 369 00:25:42,590 --> 00:25:47,990 Ali Adam is a fledgling music producer and one of Miami's most notorious drug 370 00:25:47,990 --> 00:25:53,490 dealers. In March 2002, there's a shootout where Adam and two friends are 371 00:25:53,490 --> 00:25:57,010 targeted while driving on Miami's northwest side. 372 00:25:57,470 --> 00:26:01,710 There was a drug dispute. There was a shootout where two of Ali Adam's 373 00:26:01,710 --> 00:26:03,490 were shot inside of a car. 374 00:26:04,060 --> 00:26:07,800 Allie Adam escapes with minor injuries, but his two friends are hit. 375 00:26:08,020 --> 00:26:10,260 One suffers disabling injuries. 376 00:26:11,300 --> 00:26:15,220 Miami Herald reporter Jay Weaver covers drug trafficking. 377 00:26:15,500 --> 00:26:16,860 These guys don't care. 378 00:26:17,100 --> 00:26:23,280 You know, life is cheap, and they will take a shot at anybody who's believed to 379 00:26:23,280 --> 00:26:26,680 have betrayed them or stolen money or stolen drugs. 380 00:26:27,060 --> 00:26:29,380 There are no suspects, no arrests. 381 00:26:30,140 --> 00:26:34,380 But police notice the victim's car is owned by a man named Gary Soufrant. 382 00:26:34,920 --> 00:26:38,920 He's a member in good standing with the fire department in nearby Boca Raton. 383 00:26:39,200 --> 00:26:41,760 He had a stellar career. He had a good reputation. 384 00:26:42,120 --> 00:26:45,840 Obviously because he was a firefighter. At that time, it didn't raise a lot of 385 00:26:45,840 --> 00:26:50,940 flags. But years later, Operation Compa has a different point of view. 386 00:26:51,580 --> 00:26:55,640 And as they pour through these unsolved cases, they discover a surprise. 387 00:26:56,640 --> 00:26:59,740 The suburban firefighter's name surfaces again. 388 00:27:02,220 --> 00:27:08,740 On June 17, 2004, music producer Rommel Barlartier leaves his 389 00:27:08,740 --> 00:27:12,000 Hialeah recording studio after a session with a band. 390 00:27:13,560 --> 00:27:18,520 Barlartier runs another business, trafficking cocaine from Haiti. 391 00:27:18,880 --> 00:27:21,840 He's made plenty of enemies, and they want him dead. 392 00:27:22,560 --> 00:27:25,800 Tonight, Barlartier is not the only one working late. 393 00:27:26,140 --> 00:27:29,500 There was a white van seen circling around the parking lot. 394 00:27:29,820 --> 00:27:32,580 A security camera catches what happens next. 395 00:27:32,940 --> 00:27:37,240 The second pass by, the side door of the van opened. 396 00:27:37,600 --> 00:27:41,280 The van's passenger has a gun, and Barlartier is in his sights. 397 00:27:41,580 --> 00:27:44,860 He was subsequently shot through the windshield. 398 00:27:45,260 --> 00:27:48,100 The gunman gets out of the van to finish the job. 399 00:27:48,680 --> 00:27:52,760 The gunman then exits the van and proceeds to run up to the driver's side 400 00:27:52,760 --> 00:27:54,600 vehicle and fire additional gunshots. 401 00:27:54,900 --> 00:27:59,240 The passenger flees, but Berlantier is dead on the scene. 402 00:27:59,620 --> 00:28:03,880 Police investigating his murder have very few leads, save this. 403 00:28:04,820 --> 00:28:10,180 Berlantier has connections to a nightclub called The Hideout. The 404 00:28:10,180 --> 00:28:14,800 nightclub that was opened in Hollywood, Florida. Basically a hideout location 405 00:28:14,800 --> 00:28:17,840 for people that were doing illegal things. 406 00:28:18,320 --> 00:28:22,900 Several people own the hideout, and most are known or suspected drug 407 00:28:22,900 --> 00:28:27,680 traffickers. But one owner doesn't seem to fit in with that crowd, Gary 408 00:28:27,680 --> 00:28:32,000 Soufrant. And that's what we found very peculiar, that we have a fireman who 409 00:28:32,000 --> 00:28:37,860 owns a business and is a pastor that was involved with these very violent drug 410 00:28:37,860 --> 00:28:39,200 traffickers here in South Florida. 411 00:28:39,480 --> 00:28:44,500 How could a firefighter and respected businessman have his fingers in the 412 00:28:44,500 --> 00:28:45,660 lucrative drug trade? 413 00:28:46,200 --> 00:28:49,460 The more Operation Compa digs, the more it sees. 414 00:28:50,000 --> 00:28:55,420 Gary Soufrant's name is on car leases and real estate deals involving known 415 00:28:55,420 --> 00:28:57,520 dealers. Things just didn't make sense. 416 00:28:57,780 --> 00:29:00,380 If there's smoke, there's probably fire. 417 00:29:00,680 --> 00:29:02,940 Just who is Gary Soufrant? 418 00:29:03,180 --> 00:29:05,860 He seems to live out his immigrant parents' dream. 419 00:29:06,560 --> 00:29:10,100 Demonstrators chanted slogans today, calling for an end to the Duvalier 420 00:29:10,100 --> 00:29:15,100 government. His parents flee chaos in Haiti and come to Miami looking for a 421 00:29:15,100 --> 00:29:16,100 safer life. 422 00:29:16,140 --> 00:29:22,600 He came from an immigrant family who worked hard and who pushed education on 423 00:29:22,600 --> 00:29:26,300 kids. Attorney Omar Malone represented Gary Suffrant. 424 00:29:26,520 --> 00:29:30,900 Clearly, Mr. Suffrant was a bright individual and a very smart individual. 425 00:29:31,770 --> 00:29:36,890 In 2002, Saffron opens a real estate company called Progressive Real Estate 426 00:29:36,890 --> 00:29:41,550 Broward. It's a residential firm, and Saffron's timing is perfect. 427 00:29:41,930 --> 00:29:45,570 The homes and condos keep going up, sky high. 428 00:29:45,810 --> 00:29:50,350 The prices went through the roof in a way that Miami had never seen before. 429 00:29:50,710 --> 00:29:53,650 Saffron also has a more glamorous sideline. 430 00:29:54,130 --> 00:29:59,650 Sometimes he rents out high -end condos and cars to celebrities visiting Miami. 431 00:30:00,970 --> 00:30:03,990 Saffron moves his family to suburban Broward County. 432 00:30:04,270 --> 00:30:09,550 It's a family -oriented community, a safe, quiet place with comfortable 433 00:30:09,890 --> 00:30:12,890 And Saffron treats himself to luxury cars. 434 00:30:13,450 --> 00:30:19,170 There's no doubt that Mr. Saffron liked nice cars. He liked cars from the very 435 00:30:19,170 --> 00:30:20,470 beginning as a kid. 436 00:30:20,690 --> 00:30:23,970 As a neighbor, you would think this gentleman was living the all -American 437 00:30:23,970 --> 00:30:24,970 dream. 438 00:30:26,020 --> 00:30:30,640 Next on American Greed, the preacher sets his sights on drug dealers. 439 00:30:31,440 --> 00:30:35,480 All the values that he ever had, he betrayed it for the love of money. He 440 00:30:35,480 --> 00:30:37,340 the mean green, and that's what he wanted to do. 441 00:30:38,460 --> 00:30:43,960 See where Gary Saffron's clients hid their cocaine at AmericanGreed .CNBC 442 00:30:45,580 --> 00:30:46,580 Feeling greedy? 443 00:30:47,080 --> 00:30:49,840 Want more than your share of behind -the -scenes dirt? 444 00:30:50,480 --> 00:30:53,140 Follow at AmericanGreedTV on Twitter. 445 00:30:53,400 --> 00:30:54,420 We'll be right back. 446 00:31:01,130 --> 00:31:05,730 The financial connections between Miami's most notorious drug traffickers 447 00:31:05,730 --> 00:31:09,790 Gary Souffrant intrigue a multi -agency task force. 448 00:31:10,250 --> 00:31:15,690 Operation Compa dives deep into this suburban family man's real estate 449 00:31:16,050 --> 00:31:21,450 Several times, agents visit progressive real estate of Broward. For a business 450 00:31:21,450 --> 00:31:25,930 that's supposedly thriving, the investigators think the office is eerily 451 00:31:26,510 --> 00:31:29,330 The FBI says Soufran's office assistant agrees. 452 00:31:29,770 --> 00:31:33,930 This lady that we interviewed said, you know, I thought he was a drug trafficker 453 00:31:33,930 --> 00:31:36,250 because who runs a business like that? 454 00:31:36,450 --> 00:31:40,990 As investigators will later learn, Soufran's most important clients are 455 00:31:40,990 --> 00:31:46,610 drug traffickers and suspected murderers. People like Ali Adam, the 456 00:31:46,610 --> 00:31:50,730 producer and cocaine trafficker who survived the attack in Soufran's car. 457 00:31:51,170 --> 00:31:55,070 We estimated that Ali Adam moved over 5 ,000 kilos of cocaine. 458 00:31:55,600 --> 00:31:58,900 through South Florida to Atlanta to New York, California. 459 00:31:59,320 --> 00:32:01,980 He made millions of dollars in the drug trafficking trade. 460 00:32:02,220 --> 00:32:06,420 He was rolling in money. I mean, he lived a high life. He had a condo on 461 00:32:06,420 --> 00:32:09,020 Beach and a high -rise right on the tip of South Beach. 462 00:32:09,600 --> 00:32:14,760 At South Beach nightclubs, his cash seems to fall from midair, says 463 00:32:14,760 --> 00:32:16,220 .S. Attorney Todd Mestope. 464 00:32:16,780 --> 00:32:20,460 What does it say? Making it rain at a club, basically just throwing cash in 465 00:32:20,460 --> 00:32:22,980 air. But the thug life has its challenges. 466 00:32:23,480 --> 00:32:28,120 Dealers like Adam find it hard to spend their dirty millions. He was a drug 467 00:32:28,120 --> 00:32:29,660 trafficker. He couldn't go. 468 00:32:30,320 --> 00:32:32,260 and lease a car or buy a car. 469 00:32:32,460 --> 00:32:36,200 He couldn't go to a bank and deposit $100 ,000 in cash. 470 00:32:36,560 --> 00:32:41,620 You can't spend it and hide it simultaneously because it'll eventually 471 00:32:41,620 --> 00:32:42,800 attention of law enforcement. 472 00:32:43,000 --> 00:32:47,580 And that's where the money launderers come in. They provide the camouflage for 473 00:32:47,580 --> 00:32:48,539 the drug dealers. 474 00:32:48,540 --> 00:32:52,560 A notorious dealer like Adam needs someone not on the radar of police. 475 00:32:53,370 --> 00:32:58,170 Someone who lives a clean life and who is smart enough to turn Adam's dirty 476 00:32:58,170 --> 00:33:00,750 into fancy cars and big houses. 477 00:33:01,010 --> 00:33:03,450 Someone exactly like Gary Soufrant. 478 00:33:03,810 --> 00:33:09,470 Gary, to those drug traffickers, was a blessing, which is bizarre to say, was a 479 00:33:09,470 --> 00:33:10,189 perfect fit. 480 00:33:10,190 --> 00:33:15,390 And Gary had the bona fides that they were looking for, meaning he was not a 481 00:33:15,390 --> 00:33:19,710 drug trafficker. He was a pillar of the community. They never thought that law 482 00:33:19,710 --> 00:33:21,690 enforcement would ever uncover this conspiracy. 483 00:33:22,480 --> 00:33:27,660 Ali Adam meets Gary Soufran through a mutual friend, as Ali Adam explains in 484 00:33:27,660 --> 00:33:32,580 email exchange with American Greed. He writes, I've been hearing about this guy 485 00:33:32,580 --> 00:33:37,260 who at the moment had no office or even a business card offer, but walks around 486 00:33:37,260 --> 00:33:41,440 with a firefighter uniform on. He was a good, trustable Haitian. 487 00:33:41,920 --> 00:33:46,360 The suburban minister and the South Beach drug dealer make an unlikely 488 00:33:47,200 --> 00:33:50,380 Basically, Gary Soufran became a bank. 489 00:33:51,450 --> 00:33:52,670 For these drug traffickers. 490 00:33:53,350 --> 00:33:56,210 First, Adam gives Saffron his dirty cash. 491 00:33:56,590 --> 00:34:00,610 Then Saffron deposits it into the bank account of his real estate business. 492 00:34:01,130 --> 00:34:06,530 Gary was the individual where all his drug money went to. And Gary took care 493 00:34:06,530 --> 00:34:08,550 Ali Adam. He almost used him as an ATM. 494 00:34:09,179 --> 00:34:12,679 If Adam needs pocket money, Saffron returns the cash. 495 00:34:13,000 --> 00:34:15,860 If Adam wants a new car, he goes to Saffron. 496 00:34:16,120 --> 00:34:20,040 Valley Adam, he would tell him, oh, Gary, I want the new Mercedes that just 497 00:34:20,040 --> 00:34:21,659 out. And he'd give him a model number. 498 00:34:21,860 --> 00:34:27,159 They went to purchase a car, and they actually took cash inside a diaper bag 499 00:34:27,159 --> 00:34:28,159 the car dealership. 500 00:34:28,699 --> 00:34:33,679 BMWs, a Rolls Royce Phantom, and other high -end cars are leased by Saffron's 501 00:34:33,679 --> 00:34:34,679 company, which... 502 00:34:34,889 --> 00:34:38,790 Of course, he hid Allie Adams' true ownership, except that Allie Adams was 503 00:34:38,790 --> 00:34:43,409 driving around town and getting traffic tickets galore on these automobiles. And 504 00:34:43,409 --> 00:34:47,409 that was where the paper trail led right back to Gary Souffrant. 505 00:34:48,070 --> 00:34:53,330 And Adam wants nice houses, places for his girlfriends and their children to 506 00:34:53,330 --> 00:34:57,250 live. But buying a house is complicated, especially for a criminal. 507 00:34:57,610 --> 00:35:01,110 With no legitimate income, banks won't give Adam a mortgage. 508 00:35:01,820 --> 00:35:04,680 So he calls on Gary Sufrant to work his magic. 509 00:35:05,020 --> 00:35:11,200 Gary Sufrant pretty much had control of the whole mortgage application process. 510 00:35:11,980 --> 00:35:16,860 Central to the scheme are straw buyers, people with clean records who sign for 511 00:35:16,860 --> 00:35:17,598 the loans. 512 00:35:17,600 --> 00:35:21,400 He would put them on the uniform residential loan application. So as far 513 00:35:21,400 --> 00:35:24,480 bank is concerned, this is the person that's going to buy the house. 514 00:35:24,700 --> 00:35:27,980 People like Gary's wife, Yvonne, or Adam's girlfriends. 515 00:35:28,720 --> 00:35:33,040 Saffron's accountant phonies up their W -2s. There was at least one occasion 516 00:35:33,040 --> 00:35:38,140 where Yvonne Saffron put down, I think, $21 ,000 as a monthly income. 517 00:35:38,520 --> 00:35:40,420 Not bad for a stay -at -home mom. 518 00:35:41,200 --> 00:35:45,580 After the corrupt mortgage broker and two real estate lawyers each take a cut, 519 00:35:45,780 --> 00:35:48,280 they make the transaction look official. 520 00:35:48,660 --> 00:35:53,800 Adam or his girlfriends move in. The homes that Gary would put people in were 521 00:35:53,800 --> 00:35:58,840 very nice townhouses up to mansions. But unlike many cases of mortgage fraud 522 00:35:58,840 --> 00:36:03,100 where criminals simply walk away and never make a payment, Gary Soufran 523 00:36:03,100 --> 00:36:04,900 services the debt. 524 00:36:05,530 --> 00:36:08,850 After all, his scheme depends on him looking legit. 525 00:36:09,050 --> 00:36:14,470 But it also depends on lots of new money coming in. Adam brings Sufran new 526 00:36:14,470 --> 00:36:20,010 clients. Another drug traffickers begin to deposit or give Gary drug money. Gary 527 00:36:20,010 --> 00:36:21,950 had the gift. He was able to speak. 528 00:36:22,210 --> 00:36:23,330 He had a personality. 529 00:36:23,550 --> 00:36:26,270 He was able to catch your attention. 530 00:36:26,550 --> 00:36:27,550 He used that. 531 00:36:27,950 --> 00:36:32,250 Sufran pays Adam a finder's fee, as much as $20 ,000 a deal. 532 00:36:32,920 --> 00:36:37,080 Ali Adam writes, I got a 50 -50 split on whoever I brought to him. 533 00:36:37,320 --> 00:36:43,580 We estimated that anywhere between $15 and $20 million that Gary could get his 534 00:36:43,580 --> 00:36:46,900 hands on. And in turn, he would basically take care of all these drug 535 00:36:46,900 --> 00:36:51,760 traffickers. Sopran also takes care of himself by taking exorbitant 536 00:36:52,280 --> 00:36:55,700 Gary took advantage of the fact that guys like Ali didn't really know what 537 00:36:55,700 --> 00:36:56,700 services should cost. 538 00:36:57,280 --> 00:36:59,860 And he would keep a greater and greater percentage. 539 00:37:00,750 --> 00:37:01,750 of each transaction. 540 00:37:01,930 --> 00:37:06,570 Gary Saffron was stealing money from the most violent, most egregious drug 541 00:37:06,570 --> 00:37:07,630 traffickers in South Florida. 542 00:37:07,930 --> 00:37:13,010 There were definitely two Garys. The chief of Boca Raton Fire Department knew 543 00:37:13,010 --> 00:37:15,650 the good Gary. There was, however, a bad Gary. 544 00:37:16,570 --> 00:37:21,570 Next on American Greed, with the crackdown on the dealers and the 545 00:37:21,570 --> 00:37:24,910 meltdown, Firefighter's scheme goes up in flames. 546 00:37:25,350 --> 00:37:26,590 He's in a catch -22. 547 00:37:27,090 --> 00:37:31,360 Not only does he have these houses, But he can't get rid of them. 548 00:37:43,380 --> 00:37:47,320 Investigators in Miami begin rounding up the city's toughest drug traffickers 549 00:37:47,320 --> 00:37:50,300 and aim for the financial structure behind them. 550 00:37:50,520 --> 00:37:56,360 The suburban firefighter, Gary Suffrant. As we began to look at the wheel, you 551 00:37:56,360 --> 00:37:58,740 know, all the spokes were pointing back at Gary Suffrant. 552 00:37:59,080 --> 00:38:03,960 Our process was to convict the drug traffickers, have them sentenced to 553 00:38:03,960 --> 00:38:07,760 sufficient time that they'd cooperate with us. Plus, the drug traffickers were 554 00:38:07,760 --> 00:38:10,360 violent. We wanted to get them off the streets. 555 00:38:11,520 --> 00:38:14,460 Early 2007, West Hollywood. 556 00:38:14,960 --> 00:38:19,580 Ali Adam follows his long -held dream of being a full -time music producer and 557 00:38:19,580 --> 00:38:20,800 moves to Southern California. 558 00:38:22,280 --> 00:38:27,140 That summer, investigators fly out to his new home, armed with an arrest 559 00:38:27,140 --> 00:38:33,650 warrant. We arrested Ali initially for continuing criminal enterprise, what's 560 00:38:33,650 --> 00:38:34,650 called the CCE. 561 00:38:35,090 --> 00:38:39,510 Basically, he was in charge of a drug trafficking organization that had five 562 00:38:39,510 --> 00:38:40,590 more people under his control. 563 00:38:40,870 --> 00:38:45,470 Adam pleads guilty to money laundering conspiracy and a lesser drug charge. 564 00:38:45,770 --> 00:38:47,310 He gets 30 years. 565 00:38:47,750 --> 00:38:53,090 But the music producer wants out faster, so he sings about Gary Saffron. 566 00:38:53,860 --> 00:38:57,860 Allie could tell us what houses had been bought. He took the agents around and 567 00:38:57,860 --> 00:38:59,860 they found all these different houses. 568 00:39:00,120 --> 00:39:03,900 And then it was a matter of finding all the mortgage loan documents. 569 00:39:04,580 --> 00:39:06,680 Dealers go down one by one. 570 00:39:07,020 --> 00:39:12,580 It means bad things for Gary because at this point his cash flow starts to slow 571 00:39:12,580 --> 00:39:16,140 down. If he doesn't have the drug traffickers putting money into his 572 00:39:16,200 --> 00:39:19,180 he can't pay for all the homes and he can't pay for his own lifestyle. 573 00:39:19,800 --> 00:39:23,020 As if having all his clients in jail isn't bad enough. 574 00:39:23,480 --> 00:39:27,060 The worst economic downturn since the Great Depression hits. 575 00:39:27,380 --> 00:39:30,200 And destroyed the economy of South Florida. 576 00:39:30,400 --> 00:39:36,640 I mean, it pummeled it. It wasn't just the fact that there were all these 577 00:39:36,640 --> 00:39:41,760 fraudulent loans that were made to everyday people, but it was that there 578 00:39:41,760 --> 00:39:43,220 much fraudulent loan activity. 579 00:39:43,760 --> 00:39:48,620 period, and it was going to people who were drug traffickers or people fronting 580 00:39:48,620 --> 00:39:52,860 for drug traffickers. It's money that matters to Gary Saffron, and it's all 581 00:39:52,860 --> 00:39:53,860 going away. 582 00:39:53,900 --> 00:39:55,700 Gary Saffron had the perfect storm. 583 00:39:55,900 --> 00:40:00,300 All these 30 -plus homes that was under his control for these drug traffickers, 584 00:40:00,480 --> 00:40:03,080 all their valleys deflated. They're underwater. 585 00:40:03,700 --> 00:40:04,760 Buyers disappear. 586 00:40:05,160 --> 00:40:07,460 Banks crack down on mortgage applications. 587 00:40:08,040 --> 00:40:09,220 Properties stop moving. 588 00:40:09,880 --> 00:40:11,280 Saffron is stuck. 589 00:40:11,850 --> 00:40:13,050 He's in a catch -22. 590 00:40:13,330 --> 00:40:16,630 Not only does he have these houses, but he can't get rid of them. 591 00:40:17,090 --> 00:40:19,530 The task force keeps the pressure on. 592 00:40:19,750 --> 00:40:24,070 They talk to Sufran's lawyers and mortgage broker and Adam's girlfriends. 593 00:40:25,330 --> 00:40:30,010 None are willing to take the fall for Sufran, a man who profited handsomely at 594 00:40:30,010 --> 00:40:31,010 their expense. 595 00:40:32,410 --> 00:40:37,850 Ali Adam writes, I never looked to see how much percentage I was due till I got 596 00:40:37,850 --> 00:40:39,250 locked up and did the numbers. 597 00:40:39,870 --> 00:40:41,310 $4 .5 million. 598 00:40:41,770 --> 00:40:43,450 He beat me bad. 599 00:40:43,790 --> 00:40:47,070 You talk to different individuals and the stories start to line up. 600 00:40:47,710 --> 00:40:49,150 You know, they're telling the truth. 601 00:40:50,710 --> 00:40:52,550 May 15, 2009. 602 00:40:53,050 --> 00:40:57,870 The home on a private drive where Gary Zufran and his wife Yvonne live faces 603 00:40:57,870 --> 00:41:02,990 foreclosure. He had not been paying the mortgage on it for many, many months. 604 00:41:03,570 --> 00:41:05,790 So it was in serious arrears. 605 00:41:06,280 --> 00:41:08,120 But things are about to get worse. 606 00:41:08,320 --> 00:41:12,640 The multi -agency government task force knocks on the money launderer's front 607 00:41:12,640 --> 00:41:16,320 door. He's got a pool, multiple rooms, multiple stories, 608 00:41:17,160 --> 00:41:20,140 three or four car garage, two beautiful residents. 609 00:41:20,440 --> 00:41:22,620 In the garage, high -end cars. 610 00:41:22,820 --> 00:41:27,380 One of the cars that they had, which was a Rolls -Royce Phantom, a $400 ,000 611 00:41:27,380 --> 00:41:28,380 -plus car. 612 00:41:28,720 --> 00:41:33,400 Gary Sifrant is arrested in the morning. And later, after their three kids leave 613 00:41:33,400 --> 00:41:35,440 for school, Yvonne is brought in. 614 00:41:37,390 --> 00:41:39,630 October 26, 2009. 615 00:41:40,130 --> 00:41:42,410 The Saffron case hits federal court. 616 00:41:43,010 --> 00:41:48,210 Allie Adam is among the first of 75 witnesses called in this money 617 00:41:48,210 --> 00:41:49,590 and mortgage fraud case. 618 00:41:50,430 --> 00:41:55,010 Allie Adam was probably the most important witnesses of the drug 619 00:41:55,010 --> 00:41:59,150 that were testified at trial because he did the most business with Gary. 620 00:41:59,430 --> 00:42:04,910 After his cooperation, Adam's sentence is reduced to just over 18 years. 621 00:42:05,720 --> 00:42:11,040 Gary Sifrant is found guilty on 46 counts, including mortgage fraud. 622 00:42:11,360 --> 00:42:13,800 He is sentenced to 20 years in prison. 623 00:42:14,100 --> 00:42:18,460 Yvonne is found guilty of two counts and is sentenced to four and a half years. 624 00:42:19,920 --> 00:42:22,820 Sifrant's case serves as a cautionary tale. 625 00:42:23,060 --> 00:42:24,840 You had a gentleman who had everything. 626 00:42:25,140 --> 00:42:30,340 He had the American dream. Gary Sifrant, a supposedly fine, upstanding citizen. 627 00:42:30,760 --> 00:42:33,680 Capable of as much greed as violent drug dealers. 628 00:42:34,120 --> 00:42:39,160 Gary Saffron was a con man. All the values that he ever had, he betrayed it 629 00:42:39,160 --> 00:42:42,420 the love of money. He betrayed his family. He betrayed his friends. 630 00:42:42,640 --> 00:42:47,240 He betrayed his fire department buddies and his own parishioners just for the 631 00:42:47,240 --> 00:42:51,940 love of money. The inside story of the woman who took down the mob and took 632 00:42:51,940 --> 00:42:53,080 the cocaine biz. 633 00:42:53,420 --> 00:42:56,240 She's the baddest bitch to ever take a breath of life. 634 00:42:56,780 --> 00:42:59,800 Cocaine Cowboys 2, Hustlin' with the Godmother. 635 00:43:00,280 --> 00:43:01,760 Next on CNBC. 636 00:43:02,720 --> 00:43:06,860 Restaurant Startup premieres Tuesday, July 8th on CNBC.